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I think they decided they couldn't make the 5 any cheaper in the short term, so they changed their product cycle.

Apple has been planning this for years. If they wanted to make it cheaper they would have.

It is a deliberate move and the key is now to understand why they did it.

Is it possible that Apple will settle for lower market share as long as they retain a majority of the profits? I mean look at the PC market where Apple sells relatively few units but controls nearly half of the profit. What does it matter if you only control 10% of the market if you control 90% of the profit in the long run.

Of course the issue in this argument is the App store. You could argue that by building a huge user base could allow you to shift your profits from hardware to software in the long run.

I don't know if the numbers are hypothetical but Apple is probably going to have roughly 10% of the smartphone market this quarter, but they'll also have slightly less than half the profit share, which is some way off your 90% figure. And both numbers are trending down from their peaks of ~25% and ~90%.

I'd also look to Intel and Microsoft if I was wondering where the profit in the PC market went. I'm guessing your figures for PC profit don't include the little known Wintel duo?

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